ONE of Zimbabwe’s biggest milk processing firms, Dendairy has been hit by delays in accessing foreign currency at the Reserve Bank of Zimbabwe’s auction market.

Dendairy is one of many firms that require foreign currency to import equipment and raw
materials.

However, demand at the official market far outstrips supply, leading to shortages that have undermined economic recovery. In a paper released after a tour of the Kwekwe-based firm last week, Industry and Commerce minister Sekai Nzenza said lack of foreign currency was stifling the firm’s operations.

The paper also said poor rainfall during the 2021/2022 agricultural season had affected pastures and reduced milk supply to the dairy processor.

The effect of low rains was felt across sectors, and was one of the reasons behind last week’s 4,6% downward review of 2022 growth targets by Finance and Economic Development minister Mthuli Ncube.

“Delays in accessing forex from the foreign currency auction market and the (poor) rains during the previous rain season affected pastures which affected raw milk supply,” Nzenza said during the tour, which also included other Kwekwe-based firms.

Dendairy is the major milk processor in the Midlands Province.

The firm produces a total of 15 core products including long life milk, milk plains, fruit juices, yoghurt, ice cream and fermented milk, among others.

But despite the hindrances to its operations, Dendairy has been aggressively expanding its operations.

This growth was recently noted by the country’s biggest milk producer — the Zimbabwe Stock Exchange listed Dairibord, whose bid to take over Dendairy flopped last year.

In 2013 Dendairy made an initial investment of around US$6 million into its operations.

It became the first dairy processing firm to introduce long life shelf milk on to the market, according to officials.

Nzenza said more than US$20 million had been invested into the plant, one of the biggest investments into an agro- industrial operation in the recent years.

Nzenza said an additional plant machinery worth US$3 million had been acquired and installed at the operation in 2020, after the firm commissioned its US$10 million Kwekwe plant in 2016.

At the time of commissioning, it was said that the plant would see the dairy company increasing milk production to five million litres a month against a national demand of eight million litres per month, making it the leading player in the dairy industry.

“The company has been consistently investing in its plant and grown milk supply since establishment in 2004. Dendairy, as the major milk processor in the province produces a total of 15 core products and the staff complement is 385 including casual workers,” Nzenza said.

The company’s growth prospect was also boosted by the acquisition of its 30% stake by Scandinavian private equity firm, Spear Capital.

Nzenza said her ministry had developed sector specific strategies to deal with bottlenecks affecting industries in order to enhance ease of doing business in the value chains.

The value chains include the leather sector strategy, pharmaceutical manufacturing strategy and the five-year fertiliser import substitution roadmap.

The leather sector value chain is expected to drive the operations of the country’s many agro-industrial firms, which tap raw materials from farmers to manufacture a range of products.

Zimbabwe has several fertiliser production firms, but production remains low, and the country has been forced to supplement domestic output with imports.

Under these strategies, she said the ministry was promoting import substitution, increased productivity, rural industrialisation and employment creation.

Source Newsday